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Thomas Cook restructure aims to turn around ailing travel firm

The world's oldest travel firm is scaling back on the high street and focusing online, writes Kim Benjamin.

March 20, 2013

How long?

2-3 minutes

Emergency loans, travel-agency closures, job cuts and profit warnings - struggling tour operator Thomas Cook, the world's oldest travel firm, has frequently been in the headlines in the past two years.

The brand, which is seeking to turn around a £485.3m pre-tax loss in the previous financial year, is now under scrutiny again after announcing 2500 job losses in the UK - equating to one in six staff in Britain, including cuts to the marketing department.

Its high-street agencies are expected to be major casualties of the restructure - 1600 retail positions are on the line, with Thomas Cook proposing to close 195 of its 1069 UK shops.

Group chief executive Harriet Green, who was appointed last July to revamp the brand's fortunes, last week unveiled a strategy that includes a greater online focus in an effort to close the gap on rivals that have been quicker to invest in digital. Analysts have also suggested that several smaller brands owned by Thomas Cook, including luxury travel agency Elegant Resorts and long-haul specialist Gold Medal, could also be put up for sale in the future.

Travel firms and airlines in Europe have reported a decline in bookings in the past year, but Thomas Cook has also been hit by tough trading conditions in the UK, its main market.

Will its current proposals secure its future? We asked Garry Lace, brand and marketing director at English National Opera and co-founder of Campbell Lace Beta, which handled Thomas Cook's advertising between 2009 and 2011, and Sam Turnbull, marketing director at the Association of Chartered Certified Accountants (ACCA) and former marketing director at First Choice Holidays.

THOMAS COOK STATS

23m people use Thomas Cook for European holidays annually

£485m - Thomas Cook's pre-tax loss for the 2011-12 financial year

Source: Thomas Cook

DIAGNOSIS BRAND HEALTH CHECK

Two industry experts on how Thomas Cook can attract British holidaymakers in the digital age

The words of former SAS Group chief executive Jan Carlzon - 'We have 50,000 moments of truth every day' - uttered en route to his transformation of Scandinavian Airlines, are the key to Thomas Cook's future.

Thomas Cook needs to identify its own moments of truth and focus on these.

When Beta was appointed in 2009, we told Thomas Cook it needed three things to drive its business: a brand campaign that connected emotionally with people; a world-class CRM programme; and a radical transformation of its retail environment and staff performance. My advice is the same now, only this time, Thomas Cook should follow it.

REMEDY

- Hire or partner some CRM experts to make the organisation genuinely customer-centric.

- Put in place a staff-engagement programme. Thomas Cook doesn't sell £300 holidays to Turkey. It sells the promise of the best week or two of someone's year.

- Never again put handwritten signs in shop windows, unless its ambition is to look like a local greengrocer.

We all know travel is tough. Rival brand TUI has got its web channel well organised and offers a good breadth of products. Critically, it seems to have managed to integrate its various mergers and acquisitions to deliver a slick online experience. Thomas Cook still seems to be finding this a considerable challenge and customers will, inevitably, have noticed.

Also, holidays are expensive. Customers want to be sure they are going to get what they pay for, so spring is a bad time for travel companies to be getting any kind of negative publicity.

Once the tactical summer-trading challenges have been overcome, the opportunities to use the power of this brand for growth can be explored.